'Battle mood' EU threatens bourbon whiskey in US steel trade row | Business
The European Union is prepared to impose countermeasures within days if Donald Trump takes action to protect the US steel industry, the European commission president has said.
In one of the most serious warnings of a tit-for-tat response if the US resorts to protectionist measures, Jean-Claude Juncker said the EU was “in elevated battle moodâ€. Targets could include American whiskey exports.
Speaking at the start of the G20 summit in Hamburg, he said: “I don’t want to tell you in detail what we’re doing. But what I would like to tell you is that within a few days â€" we won’t need two months for that â€" we could react with countermeasures.
“I am telling you this in the hope that all of this won’t be necessary. But we are in an elevated battle mood.â€
Buoyed by its free trade deal signed with Japan this week, the EU is determined to defend the multilateral trade system, with officials warning the US not to take any measures against either Germany or China’s steel industries.
The EU, it is understood, is likely to retaliate by focusing on US agricultural products. Officials confirmed one target might be bourbon whiskey, one of the main exports of the state of Kentucky, the home of Mitch McConnell, the US Senate majority leader.
The EU is hoping to divide the Republicans by warning that Republican protection for the rust best will lead to EU retaliation in the American farm belt.
The EU trade commissioner, Cecilia Malmström, has said she is “extremely worried†about a US threat to curb steel imports for national security reasons, saying the step could trigger protectionist reactions around the world.
Trump launched an inquiry into steel imports in April that is likely to report in the coming days.
US trade law allows the president to unilaterally “adjust†imports should the Department of Commerce find evidence of a national security threat from foreign shipments.
Trump has pulled out of a new transpacific commercial accord, frozen talks on a deal with the 28-nation EU and questioned the terms of a longstanding pact with Canada and Mexico.
Malmström has warned that any unilateral US action would lead to a reference to the World Trade Organization.
The large global steel surplus has mainly been caused by China, even as Chinese steel exports to the US have been declining.
Total US steel imports last year amounted to 26m tonnes, of which 3.2m were shipped from the EU by companies such as Thyssenkrupp AG, Salzgitter and Celsa Group. The EU shipments were worth €2.8bn ($3.1bn), according to the European Steel Association.
EU officials insisted they were happy to examine allegations of Chinese steel dumping, but could not endorse any unilateral measures, even if only trained on China.
“Even if we are not the target, we will be collateral damage in this process, which is going to hit Europe very hard,†Malmström said. Other countries likely to be affected include South Korea and Japan.
The dispute adds edge to the dispute under way between diplomats over the wording of the G20 communique on trade. The G20, normally an advocate of free trade, is likely to avoid a wording clash by referring to free and fair trade. The communique of the recent G7 in Sicily referred to support for fighting protectionism and a rules-based international order.
Trump declared the opening of the steel investigation “a historic day for American steel and most importantly for American steel workersâ€, suggesting he would like it to back protectionist measures.
Only two US presidents â€" Richard Nixon and Gerald Ford â€" have granted relief under section 232 of the 1962 trade law, citing national security concerns stemming from the global oil crisis of the 1970s.
The European council president, Donald Tusk, also revealed some members of the G20 were opposing words in the draft communique supporting sanctions, and asset freezes being imposed on Libyan smugglers of refugees.
Neither Tusk nor his officials would identify the country mounting the resistance, but he described the culprit’s actions as cynical.
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